Financial Accounting Introduction
Financial Accounting â—? Accounting is the process that includes creating records for a daily transaction of the company. â—? Accounting has several branches and fields. Most famous among them is a financial accounting. It creates the report that gives clear information about the financial health of the company.
Financial Accounting â—‰ Financial accounting deals with the preparation and presentation of reports called financial statements. These statements present a company's condition, results of operations, cash flows, and other related information. â—‰ Financial statements include a balance sheet, an income statement, stockholders equity statement, a statement of cash flows, and supplementary notes.
Income Statement
“ The income statement shows company profitability and growth during the specific time span. Income statement includes revenue, expense, gain, and loss. It has all information how much revenue earned and expenses incurred.
Balance Sheet
“ The balance sheet is divided into assets, liabilities, and stockholders' equity. Assets include cash, accounts receivable, inventory, prepaid insurance, buildings, and equipment.
Balance Sheet
“ Liabilities are obligations that must be paid back. It includes notes payable, accounts payable, wages payable, and interest payable. Stock equity is defined as the difference between a number of assets and a number of liabilities.
Cash Flow Statement
“ Cash flow statement has three parts: operating activities, investing activities, and financing activities. Operating activities explain how a company's cash have changed due to daily give and take transactions.
Cash Flow Statement
“ Investing activities are amount spent or received in transactions of long-term assets. The financing activities include long-term debt, issuance of stock, money spent on long-term liabilities.
Stockholders' Equity Statement
“ The statement of stockholders includes net income, other comprehensive income, dividends, the repurchase of common stock, and the exercise of stock options that company has invested in.
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